The road to Utopia is the road to Hell. — Communism and socialism are the opiates of the intelligentsia. — The left, in its eternal and futile quest for "equality", is more than willing to abolish liberty and sunder fraternity.

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A True Flat Tax

I do not grant that government’s decision to refrain from taking X‘s money means that government subsidizes X. The tax-exemption might be unwise policy, and it might be unfair (by some plausible guideposts) – and it almost certainly gives the tax-exempt organizations an advantage that they would otherwise not possess.

But tax-exemption does not involve taking money from Y and giving it to X. That fact is vital.

I’m not so sure.

The reason I’m not so sure is that “tax-exemption … almost certainly gives the tax-exempt organizations an advantage that they would otherwise not possess.” In other words, X‘s revenues are greater than they would be absent X’s tax-exempt status. By the same token, Y‘s revenues are less than they would be absent X‘s tax-exempt status. It may be true that X’s greater revenues do not accrue as profits, but they do accrue in some form. For example, in the defense-analysis industry, with which I am familiar, the employees of tax-exempt organizations — known as federally funded research and development centers (FFRDCs)– enjoy more luxurious offices; higher compensation, mainly in the form of benefits (e.g., more vacation time, larger company contributions to health insurance premiums, better retirement plans); and more stable employment (because FFRDCs operate under long-term, sole-source contracts that tend to be renewed decade after decade). The benefits that accrue to X‘s employees because of X‘s tax-exempt status are, in effect, a subsidy paid by Y‘s shareholders and employees.

Another way to look at it is this: In a balanced-budget world, the cost of government would be defrayed entirely by tax revenues. Given a government of a certain size, the exemption of some firms from paying taxes requires that other firms’ shareholders and employees pay higher taxes. That is a subsidy, if I ever saw one.

Going one step further, consider the proper function of government, which is to protect the lives, liberty, and property of citizens. It is none of government’s business what a citizen does when his life, liberty, and property are secure, as long as he doesn’t use it to impinge on the lives, liberty, and property of others. Whether a person makes a billion dollars a year or one dollar a year is really not the government’s concern, nor is it the government’s concern whether a person lives in a castle or a cardboard box. Such things, if they are of concern to anyone other than the person in question, are of concern to that person’s family, friends, neighbors, private charities, and so on.

It follows that government has no proper claim on the amount of income or wealth that a person acquires through the legitimate use of his liberty (such as it is). Warren Buffet and Bill Gates owe the government no more than a panhandler. Buffet and Gates simply have made better use of the protection afforded them by government, at least with respect to the acquisition of income and wealth.

The proper level of taxation, therefore, is that which defrays the cost of the governmental functions which protect the lives, liberty, and property of citizens: defense, courts, and law-enforcement. The cost of those functions is about $3,000 a year for every person aged 21 and older.* Everyone (21 and older) whose annual tax bill includes more than $3,000 for “liberty” services is subsidizing everyone (21 and older) whose annual tax bill for the same things is less than $3,000. All taxes for other services, regardless of who pays them, are forms of theft.**

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* The annual cost of national defense, the courts, and law-enforcement agencies is about $600 billion. That amount, divided by 200 million (the approximate number of persons in the United States aged 21 and older) yields an annual per-person cost of $3,000. I exclude persons under 21 because most of them still depend on adults for their subsistence, and have not yet advanced to the stage of making the most of the protections afforded by government.

** Some taxes underwrite regulatory functions, which are counterproductive. Some taxes underwrite services that are used by varying percentages of the populace (e.g., parks, highways), which (a) burdens those taxpayers who do not use the services in question, (b) subsidizes those taxpayers who do use the services in question, and (c) substitutes inefficient, unresponsive political-bureaucratic entities for more efficient, more responsive private firms. A large proportion of taxes (especially for Social Security and Medicare) simply take money from workers and give it to non-workers — an open-and-shut case of theft.

Comments & Correspondence

Now that this blog is in hiatus, I have closed comments on all posts. If you wish to communicate privately, you may e-mail me at the Germanic nickname for Friedrich followed by the last name of the great Austrian economist and Nobel laureate whose first name is Friedrich followed by the 3rd and 4th digits of his birth year followed by the usual typographic symbol followed by the domain and extension for Google’s e-mail service — all run together.

On Liberty and Libertarianism

What is liberty? It is peaceful, willing coexistence and its concomitant: beneficially cooperative behavior.

John Stuart Mill opined that "the only purpose for which power can be rightfully exercised over any member of a civilized community, against his will, is to prevent harm to others." But who determines whether an act is harmful or harmless? Acts deemed harmless by an individual are not harmless if they subvert the societal bonds of trust and self-restraint upon which liberty itself depends.

Which is not to say that all social regimes are regimes of liberty. Liberty requires voice -- the freedom to dissent -- and exit -- the freedom to choose one's neighbors and associates. Voice and exit depend, in turn, on the rule of law under a minimal state.

Liberty, because it is a social phenomenon and not an innate condition of humanity, must be won and preserved by an unflinching defense of a polity that fosters liberty through its norms, and the swift and certain administration of justice within that polity. The governments in and of the United States have long since ceased to foster liberty, but most Americans are captives in their own land and have no choice but to strive for the restoration of liberty, or something closer to it.

Who can restore liberty? Certainly not the self-proclaimed libertarians who are fixated on Mill's empty harm principle and align with the left on social norms. Traditional (i.e., Burkean) conservatism fosters the preservation and adherence of beneficial norms (e.g., the last six of the Ten Commandments). Thus, by necessity, the only true libertarianism is found in traditional conservatism. I am a traditional conservative, which makes me a libertarian -- a true one.

Notes about Usage

“State” (with a capital “S”) refers to one of the United States, and “States” refers to two or more of them. “State” and “States,” thus used, are proper nouns because they refer to a unique entity or entities: one or more of the United States, the union of which, under the terms and conditions stated in the Constitution, is the raison d’être for the nation. I reserve the uncapitalized word “state” for a government, or hierarchy of them, which exerts a monopoly of force within its boundaries.

Marriage, in the Western tradition, predates the state and legitimates the union of one man and one woman. As such, it is an institution that is vital to civil society and therefore to the enjoyment of liberty. The recognition of a more-or-less permanent homosexual pairing as a kind of marriage is both ill-advised and illegitimate. Such an arrangement is therefore a “marriage” (in quotation marks) or, more accurately, a homosexual cohabitation contract (HCC).

The words “liberal”, “progressive”, and their variants are usually enclosed in quotation marks (sneer quotes) because they refer to persons and movements whose statist policies are, in fact, destructive of liberty and progress. I sometimes italicize the words, just to reduce visual clutter.

I have reverted to the British style of punctuating in-line quotations, which I followed 40 years ago when I published a weekly newspaper. The British style is to enclose within quotation marks only (a) the punctuation that appears in quoted text or (b) the title of a work (e.g., a blog post) that is usually placed within quotation marks.

I have reverted because of the confusion and unsightliness caused by the American style. It calls for the placement of periods and commas within quotation marks, even if the periods and commas don’t occur in the quoted material or title. Also, if there is a question mark at the end of quoted material, it replaces the comma or period that might otherwise be placed there.

If I had continued to follow American style, I would have ended a sentence in a recent post with this:

What a hodge-podge. There’s no comma between the first two entries, and the sentence ends with an inappropriate question mark. With two titles ending in question marks, there was no way for me to avoid a series in which a comma is lacking. I could have avoided the sentence-ending question mark by recasting the list, but the items are listed chronologically, which is how they should be read.

This not only eliminates the hodge-podge, but is also more logical and accurate. All items are separated by commas, commas aren’t displaced by question marks, and the declarative sentence ends with a period instead of a question mark.